Markets end second week of gains after Mubarak resigns

<p>Traders work on the floor of the New York Stock Exchange, February 7, 2011. REUTERS/Brendan McDermid</p>

NEW YORK (Reuters) - U.S. stocks closed out their second straight week of gains on Friday with a rally sparked after Egyptian President Hosni Mubarak resigned, easing tension around the region for now.

The S&P’s five-month surge, which has taken it up almost 27 percent, has confounded those calling for a correction, but weak volume recently has been undercutting the unfailingly bullish direction in equities. Only 7.7 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year’s daily average of 8.47 billion.

The volume “suggests that maybe we’re getting waning interest and a narrowing of the market,” said James Gaul, portfolio manager at Boston Advisors LLC in Boston, which manages $1.7 billion.

Financials led on the back of the reduced uncertainty, rising throughout the trading day. Bank of America Corp (BAC.N) gained 1.9 percent to $14.77 and the KBW Banks index .BKX added 1.8 percent.

Two weeks of anti-government protests in Egypt sparked concerns the unrest could spread across the Middle East, contributing to volatility in markets and commodity prices worldwide.

“If things deteriorated in Egypt that would have created a risk for U.S. markets, especially if the Suez Canal was closed,” Gaul said. “We’ve removed a short-term uncertainty and are seeing a positive reaction as a result.”

He added that some uncertainty persisted. Vice President Omar Suleiman said a military council would run Egyptian affairs, but some have questioned the army’s appetite for real democracy.

The Dow Jones industrial average .DJI was up 43.97 points, or 0.36 percent, at 12,273.26. The Standard & Poor's 500 Index .SPX was up 7.28 points, or 0.55 percent, at 1,329.15. The Nasdaq Composite Index .IXIC was up 18.99 points, or 0.68 percent, at 2,809.44.

For the week, the Dow is up 1.5 percent and both the S&P and Nasdaq are up 1.4 percent.

Kraft Foods Inc KFT.N limited gains in the Dow on Friday a day after it cut its 2011 profit growth forecast, sending the stock down 1.4 percent to $30.66, the biggest percentage decliner on the blue-chip index.

Commodities were a weak spot as crude oil prices declined in parallel with a falling-off of worries of possible oil supply problems in the Middle East. March crude futures dropped 1.5 percent.

Nokia NOK1V.HE (NOK.N), the world’s largest cellphone maker, and Microsoft (MSFT.O) teamed up to build an iPhone challenger in an attempt to take on Google and Apple in the fast-growing smartphone market.